UK Retail Post-COVID and Charity Shops of our retail landscape

There are still three hugely important ‘unknowns’ which I believe hold the key to the future health and recovery of the UK retail sector ‘post-COVID’

The first should become clearer from mid-April, when ‘non-essential ‘stores can reopen (in England) and shoppers are then able to freely return to their local High Streets, town and city centres.

But although the COVID rules say these stores can start to trade again, will they all choose to do so? And just because all these ‘non-essential’ retailers can open, will shoppers choose to return to physical stores?

According to data from LDC, an interesting precedent from last year (when the first COVID lockdown ended in early June) was that 20% of ‘non-essential’ retailers still hadn’t reopened by the end of September/early October 20201 when England then entered regional tiered lockdowns.

However, longer term I am convinced most people will eventually return to shop in stores because they crave that human connection. This social aspect of shopping (whether the marketplace or the meeting place) cannot be underestimated as it’s been central to our town and city centres since Greek and Roman times.

However, in the short term I just don’t think most shoppers will be rushing out in huge numbers next week to travel on public transport to their town and city centres. I may be wrong and there will be queues outside Primark, but it will take several weeks before a realistic pattern of ‘post lockdown’ footfall is established.

The second unknown is over a slightly longer period and focuses on whether the millions of ‘commuting office workers’ across the UK either choose to return to their pre-COVID office locations — or indeed are required to do so by their employers.

However, I believe that after a full year for so many people of ‘WFH’ because of COVID, the UK working landscape has changed forever. Already some major employers (including for example Nationwide, BP, RBS, and IBM) are signaling to employees that going back to a full five days a week in the office won’t happen and some form of blended or mixed home and office-based work is the future.

This is supported by a recent study from the Centre for Economics and Business Research (CEBR) found 32 per cent of office-based staff are expecting to partially work from home even after lockdown ends.

This has huge implications for retail, particularity in London and all the major regional cities including Nottingham and has already caused havoc for city centre retail even when retailers can reopen and trade — not least for those located at the major commuter transport hubs.

The retail beneficiaries of continued WFH are of course the more local, suburban shopping streets and in particular those independent retailers who often occupy these locations. This has been driven not just by working from home but also but linked to an increasing sense of both place and community by many shoppers.

What shoppers now want is an offering that reflect the uniqueness of the place, the local communities, local products too. Innovative and imaginative community-focused spaces, with Independent retailers offering products that have provenance and linked to local heritage and culture.

A recent Enterprise Nation poll indicated that one in three shoppers planned to spend more at local independent stores and that rose to half of those aged under 35.

Given working from home is going to continue for many I believe this this change in shopping habit is likely to be long term and probably permanent.

The third unknown is whether the uncertainty and anxiety of the past year will continue even as things such as the opening of ‘non-essential’ retail start to move back to ‘normal’. Consumer confidence is key to the future health of retail and I’m just not sure that this is clear at present.

Many households have clearly accrued savings over the past year because of cancelled holidays, meals out, entertainment gyms and other discretionary expenditure (the OBR estimate this could be as high as £180bn) and as a result there have been predictions of a post-Covid ‘spending boom’ (or a 21st Century equivalent of the ‘roaring twenties’)

However, there are also understandable fears about an unequal ‘bounce back’ because lots of consumers financial position has weakened over this same period because of unemployment and for many others, their future job security had reduced with possible unemployment in the second half of 2021 when the various Government furlough and business support schemes will inevitably end.

Charity Shops — an established and valuable part of our retail landscape.

There are an estimated 11,000 -12,000 Charity shops located across the UK according to the Charity Retail Association. They play a hugely important part in many of our High Streets but for several years have received widespread criticism as somehow ‘taking over’ our local High Streets and as a result damaging the shopping appeal and vibrancy of these shopping areas.

The reality is quite different. Charity shops account for only around 5% of all retail outlets in the UK — and according to the latest data from LDC over 350 closed for good in 2020. So, the impression that charity shops are expanding hugely in numbers and swamping local retail locations is clearly not true.

However, I believe this impression may have been created because most charity shops are located in local High Streets and residential areas — only 5% are in shopping centres or retail parks.

Because charity shops also need to be located close to residential areas and have nearby parking facilities (so helping members of the public bring donated clothes and other household goods) it’s also not unusual to have two or three charity shops grouped together in adjacent retail units.

This all just means they are more visible to many of us daily and so perhaps leading to this widespread misunderstanding that Charity shops account for many more than just 1 in 20 retail outlets!

It’s also interesting that the largest ten national charities (Oxfam, Barnardo’s, THF, Cancer Research UK, Age UK etc.) together account for just 37% of all charity shops, and so the vast majority are smaller and less well-known charities which are often closely linked to local communities and operate without the infrastructure and full-time paid employees of some of the major charities.

In total, charity shops provide a total of almost £400m income for charities every year but rely on local public donated clothes and other household goods for 90% of this total.

Over the past year and since the first COVID-19 lockdown, almost all the 166,00 registered charities and voluntary organisations across the UK, and not just those with shops, have been hit by several unpredicted challenges.

This has involved not only the cancellation of almost all their regular fund-raising activities such as street or door-to-door collections, as well as a range of charity sponsored sporting events, ranging from marathons runs to parachute jumps, but the enforced closure (as ‘non-essential’ retailers) of all their shops.

Charity shops across the UK rely on an army of over 230,000 volunteers to keep operating, but because many are retired and so older, they have not all been able to continue because of shielding or other health concerns related to COVID-19.

This slump in charity shop income has happened at the same time as services provided by many charities have been in greatest demand. With unemployment rising above 5%, over 700,000 jobs lost since COVID-19 began last year and with 5 million employees still supported by Government furlough schemes which will inevitably have to be wound down this year.

According to the Resolution Foundation, the poorest 20% of UK households have seen their savings deteriorate over the past 12 months and in a recent survey conducted by Pro Bono Economics 72% of those charities which responded said they expect to see an increase in demand for their services over the next sis months, compared to pre-COVID expectations.

Meanwhile many of us have taken the opportunity to clear out wardrobes and cupboards at home during lockdown and so there are huge volumes of clothing and household goods just waiting to be taken to local charity shops once lockdown eases.

However, COVID-19 rules mean donated goods now need to be ‘quarantined’ for at least 48 hours before being checked, sorted, and displayed for sale which will present yet another logistical and operational challenge for the volunteers involved, often working is relatively small retail units with limited storage space.

So, the reopening of many charity shops next week is very welcome, but still not without challenges for a sector which, as a friend recently reminded me, plays such an important role at both ends of the value chain (‘people want to donate, and people want to buy’) and so is an established and valuable part of our retail landscape.

source https://klinkerbud.medium.com/uk-retail-post-covid-and-charity-shops-of-our-retail-landscape-91e26a4f1f15?source=rss-8a287f9546ea------2